Global Capitalism 'On the Edge of Abyss'

10-30-08, 9:34 am

Original source: People's Voice

In an Oct. 21 statement noting that global capitalism is 'on the edge of the abyss,' the Canadian Labour Congress says that 'dramatic recent events have thrown into sharp relief some chronic and long-standing problems of our global and national economic system: an over-developed financial sector which has fueled rampant speculation rather than productive, job-creating investments in the real economy; huge returns for senior executives and corporate insiders while the wages and the incomes of working families have stagnated; rising household debt instead of a fair sharing of productivity gains with workers; over-reliance on the export of raw resources; a deep crisis in our manufacturing and forest industries; and massive global financial imbalances driven by unbalanced and unfair trade.'

'The age of deregulated neo-liberal global capitalism is over,' the CLC says, adding that 'Financial collapse has led not just to the discrediting of an ideology, but also to a major reassertion of the role of governments in maintaining systemic financial stability.'

The CLC calls for a coordinated international response to 'avoid future financial crises by strengthening government regulation of the banks and other financial institutions, and by extending the scope of government regulation to include hedge funds and private equity groups.'

Other measures advocated by the Congress include restrictions on capital flight, deeper cuts to interest rates, and a transactions tax on all securities trading to discourage short-term speculation and to raise government revenues.

More government assistance to the Canadian banks, says the CLC, should be given 'only in return for an equity position, with a view to increasing the power of the federal government to regulate and supervise the banks on an ongoing basis' and to help ensure lines of credit.

Rejecting the 'myth that Canada has not experienced a housing bubble,' the CLC says the CMHC be able to draw upon government funds to refinance distressed mortgages at lower rates.

Another reform advocated by the CLC is public reviews of all major corporate mergers and acquisitions, with approval dependent on real investment and employment.

Responding to the wave of corporate greed which helped fan the crisis, the CLC calls for restrictions on stock option compensation to executives, a surtax on very high incomes, and full inclusion of capital gains in taxable income.

Predicting that the only real question is 'how deep and prolonged the crisis will be,' the CLC rejects right-wing demands for budget slashing.

The Congress advocates an immediate emergency fiscal stimulus of at least $10 billion over each of the next two years, mainly directed to energy efficiency and renewable energy projects including building retrofits and public transit, to create at least 200,000 jobs. Priority should also be given to public infrastructure and affordable housing projects.

The CLC also urges 'sectoral economic strategies to rebuild our industries, particularly the hard-hit manufacturing and forestry sectors. Further corporate tax cuts should be cancelled and replaced by direct government support for new private sector investment in machinery and equipment, research and development and training.'

Turning to the social sector, the CLC proposes 'major investments in child care and early learning, home care and long-term care and high quality public education. Post-secondary education and training programs must be expanded to help upgrade the skills of laid off workers.'

The current Employment Insurance system, it says, 'will leave many Canadians out in the cold, unable to qualify for benefits... With an accumulated surplus of more than $50 billion in the EI Account, the federal government must maintain and increase benefits, and also expand spending from the EI Fund to pay for labour adjustment and training programs.'

The Congress warns that 'the financial crisis, combined with a major recession, threatens to produce a severe pensions crisis as companies in major difficulties face large pension fund deficits.' It urges a national pension guarantee fund supported by a financial transaction tax, and limits on investments in hedge funds, private equity and other risky assets.

Pointing out that 'the roots of this crisis lie not just in the excesses of finance, but also in the fundamental imbalance of power between workers and employers,' the Labour Congress says that 'when people earn decent wages, all parts of the economy do well. As was shown in the 1930s, this will be achieved not just through more government intervention in the economy, but also by building strong unions and increasing the bargaining power of labour.' This should include anti-scab legislation, protections for new union organizing through card check certification, and first contract arbitration.

The CLC statement is noteworthy for its forceful condemnation of the capitalist crisis, although the wide-ranging measures it advocates to soften the impact do not include any mention of genuine public ownership and democratic control of the economy. Given the social democratic orientation of most of Canada's trade union leadership, this is no surprise.

Perhaps more to the point, while the statement correctly notes the need for a stronger labour movement, the CLC has not initiated any plans for a major public campaign on the economic crisis. As job losses mount and Canadian workers face an uncertain future, it is to be hoped that the CLC and the Quebec trade union centrals will take the lead in launching such a mass fightback – sooner rather than later.